What is an endorsement in an insurance policy?

An endorsement in an insurance policy refers to a written agreement that modifies the original terms of the policy, allowing for the addition or subtraction of coverage. This can include various changes such as adding coverage for specific items, removing certain exclusions, or altering limits on claims. Endorsements are essential because they provide a way for policyholders to customize their insurance coverage according to their changing needs without having to purchase a new policy.

By incorporating an endorsement, an insurance company can ensure that the policy remains relevant and comprehensive, reflecting any shifts in the policyholder's circumstances or the insurance environment. This flexibility is a key feature of many insurance policies and helps policyholders maintain adequate protection as their situations evolve.

Other options do not accurately define an endorsement. For instance, a clause for lowering premiums does not pertain to changing coverage levels, while a summary of policyholder claims is focused on tracking past claims rather than modifying coverage. A detailed list of covered perils identifies what is included in the policy but does not encompass the contractual modifications that an endorsement represents.